USD/JPY – Japanese yen climbs to 14-week high as U.S-China tensions worsen

USD/JPY has resumed its downward trend on Monday. In the North American session, the pair is trading at 109.20, down 0.69% on the day. It’s quiet on the release front, with no U.S. events. In Japan, today’s highlight is current account, which is expected to fall to JPY 1.71 trillion.

The yen hasn’t received much help from economic conditions in Japan or Bank of Japan policy, but the currency has taken full advantage of rising tensions between the U.S. and China. The Japanese currency has gained 0.8% on Monday and has climbed 2.6% in May, as risk appetite has sagged and investors have snapped up the safe-haven yen. On Friday, the U.S. raised tariffs on $200 billion in Chinese goods, from 10% to 25%. The move was announced a week ago, and sharp declines in the equity markets have boosted the yen. On Monday, China retaliated, announcing that it would slap tariffs on $60 billion of U.S products.

Despite the dramatic rise in tariffs and the Chinese promise to retaliate, talks between the sides continue, with officials scheduled to meet in Beijing. The new tariffs do not apply to Chinese goods that left port prior to May 10, affording a 2-week window for negotiators before the tariffs take effect. The escalation in tensions has shelved a meeting between President Trump and Chinese President Xi, but the two leaders could meet at the G-20 summit in Japan in June.

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USD/JPY Fundamentals

Monday (May 13)

• 9:10 FOMC Member Clarida Speaks
• 1:00 Japanese Leading Indicators. Estimate 96.4%. Actual 96.3%.
• 19:50 Japanese Current Account. Estimate 1.71T
• 19:50 Japanese Bank Lending. Estimate 2.3%
• 23:35 Japanese 30-year Bond Auction

*All release times are DST

*Key events are in bold

USD/JPY for Monday, May 13, 2019

USD/JPY May 13 at 11:05 DST

Open: 109.95 High: 109.95 Low: 109.06 Close: 109.20

USD/JPY Technical

USD/JPY continues to break through support levels as its heads lower. The pair posted slight losses in Asian trade and was flat in the European session. USD/JPY has posted considerable losses in North American trade

• 108.70 is providing support
• 109.35 is a weak resistance line
• Current range: 108.70 to 109.35

Further levels in both directions:

• Below: 108.70, 108.10 and 107.50
• Above: 109.35, 110.40 and 111.15

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